Bloom_May_14

Personal

CONTENTS

○ A new breed of

annuity could help fill

the U.S. retirement gap

○ After an awesome

earnings season, why is

the bull staggering?

○ The battle for mobile-

payment supremacy

ILLUSTRATION BY LIA KANTROWITZ

May 14, 2018

Edited by

Pat Regnier

○ Maybe diversification is too

easy. Wall Street’s new pitch is

risk parity

Make Investing

ComplicatedAgain

Wealthfront Inc., an online money manager,

attracted a following in Silicon Valley and

expanded its assets under management to

$10 billion by offering a simple proposition.

Instead of telling clients which stocks to buy or

which supposedly brilliant money manager to

pick, Wealthfront charges a low fee to help peo-

ple spread their assets among exchange-traded

funds that passively track the market. It adjusts

that allocation to stocks, bonds, and other

assets according to a client’s tolerance for risk.

Customers loved Wealthfront’s passive invest-

ments. In February, however, the company added

something new. The Wealthfront Risk Parity Fund is

automatically included in accounts with more than

$100,000 in taxable assets unless the client opts out.

The fund is supposed to follow an approach taken

by hedge fund manager Ray Dalio of Bridgewater

Associates. Only a portion of clients’ money would

be invested in it, the rest going into more traditional

fare such as low-cost Vanguard funds. Rather than

cheering at the opportunity to invest like an exclu-

sive hedge fund, some Wealthfront clients expressed

puzzlement about an unusual strategy with added

expenses. “I’m not bailing on Wealthfront yet, but

I am opting out of Risk Parity until someone can